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Pound to Australian Dollar (GBP/AUD) Exchange Rate Edges Higher as Dovish Fed Dampens Risk Sentiment

Australian Dollar Currency Forecast

GBP/AUD Exchange Rate Rangebound as Global Economic Concerns Return

The Pound to Australian Dollar (GBP/AUD) exchange rate rose by 0.3% today, with the pairing currently trading around AU$1.83.

The Australian Dollar (AUD) has suffered from a sell-off of risky assets today following the US Federal Reserve took a significantly dire stance on the US economic outlook.

The Fed said that the UK economy would likely shrink by -6.5%, leaving many markets concerned that the world’s largest economy could be facing an unprecedented setback due to the coronavirus pandemic.

Jerome Powell, the Fed’s Chairman, said that the US economy is on a ‘long road’ to recovery, and that this ‘is going to take some time’.

In Australian economic news, today saw the release of June’s Australian consumer inflation expectations drop from 3.4% to 3.4%. As a result, many ‘Aussie’ traders are becoming concerned for Australia’s economy recovery in the coming months.

Today saw safe-havens like the US Dollar and Swiss Franc edge higher as risk-sentiment fell. However, if the global economic situation improves, we could see risk-on market return and buoy the Australian Dollar.

Pound (GBP) Rises Despite Growing Fears for British Economy

The Pound (GBP) edged higher against the Australian Dollar (AUD) today despite growing fears over the UK’s economic growth. Tomorrow will see the release of the UK’s growth report for the April, which is expected to drop by a whopping -18.4%.

Meanwhile, last night saw the UK’s housing sector suffer from the coronavirus crisis, with the UK RICS Housing Price Balance falling by -32%.

Ross Counsell, director at Good Move, commented on the report:

‘Today’s results point to a slight improvement in the outlook for sales over the coming 12 months.’

‘However, we must not forget the impact that the current pandemic has had on both buyers and sellers. Today, people are a lot more cautious with their finances due to a decrease in home income caused by loss of work and other factors.’

Nevertheless, GBP investors are now focusing on Downing Street’s next steps on the UK’s nationwide Covid-19 lockdown. As a result, we could see the GBP/AUD exchange rate continue to edge higher if the 2-metre distancing rule is scrapped.

GBP/AUD Forecast: Could Falling UK Growth Figures Drag Down Sterling?

Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK’s industrial production figures for April. However, if this confirms forecasts and falls from -4.2% to -15%, then we could see Sterling suffer.

Tomorrow will also see the release of the UK’s GDP figure for April. As a result, we could see the GBP/AUD exchange fall as the figure is expected to significantly contract.

The Australian Dollar (AUD) will remain sensitive to risk-sentiment for the rest of this week. Any signs of the global economy recovery sooner than expected would prove AUD-negative.

The GBP/AUD exchange rate will fluctuate into the weekend, with investors remaining alert for any sudden changes in the UK’s lockdown measures. Consequently, Sterling could struggle if the UK’s economic recovery looks grim going into next week.